It is not just UK citizens who can receive honours. Citizens from the 15 Commonwealth Realms (of which The Queen is Monarch), can also receive honours both through the UK Honours system and the system of their own country.
UK Honours for Commonwealth Citizens
With the permission of the relevant government, the UK Government can recommend Commonwealth citizens for UK honours. The recipient will usually receive their honour in their home country by their Governor-General (The Queen's representative in that country). However, they can also request to attend an investiture at Buckingham Palace.
The Queen is also Sovereign of the honours systems of certain Commonwealth countries, for example the Orders of Canada, Australia and New Zealand. You can find out more about these orders through the links below:
Commonwealth Honours for UK Citizens
Occasionally a Commonwealth Government nominates a UK citizen to receive one of their own honours, with permission from The Queen. These British citizens are usually allowed to wear the honour's insignia and use the relevant postnominal letters. However, they would not be permitted to use any associated titles, as the UK Government regards these awards as honorary.